NEW DELHI: India hopes to avoid an abrupt end to oil imports from Iran without triggering sanctions even as it readies a rupee payment mechanism for oil imports from the Islamic Republic.
The US and India haven’t had any conversation yet on possible exemption but officials believe that the door for negotiations is still open despite strong words from the US recently to eliminate oil import from Iran.
Officials see a window of opportunity because a recent update in the US treasury’s website lists circumstances in which the US government can waive sanctions.
The tough words from the US are certainly aimed at the better compliance of sanctions by all countries as well as at making it harder for importing countries to negotiate waivers, an official said.
The US is probably trying to lower importing countries’ expectations before any negotiation on waivers start, he said.
It has been learnt that Nikki Haley, the US envoy to UN and close Trump aide, during her recent visit to Delhi called for cutting import of Iranian oil, but was politely told that it would be extremely difficult for India to make any significant cut. Ties between India and Iran range from the energy trade to connectivity projects, and cutting trade between the two countries could hurt India’s long-term interests, experts said.
Indian and US officials are likely to meet this month to figure out the implications of the Iran sanctions for India. There are some hints from the US of possible exemptions to purchase a reduced quantity of oil from Iran, officials said.
On June 26, a US state department official said India or China would receive no waiver of sanctions and their companies risk secondary sanctions if they continued importing oil from Iran from November 4.
But just the next day, on June 27, the US Treasury Department updated its FAQs on Iran sanctions, leaving scope for the waiver, an Indian official said, citing this as a sign that the US would be amenable to discussing exemptions.
The FAQs refer to a provision for waiver of the sanctions if the secretary of the treasury determines that a waiver is necessary to the national interest of the United States.
The document also provides for the secretary of state, in consultation with other secretaries, determining if any country has ‘significantly reduced the volume of Iranian crude oil purchase’. The secretary of state would ‘consider relevant evidence in assessing each country’s efforts to reduce the volume of crude oil imported from Iran’.
For Indian officials, these words represent US flexibility in dealing with certain importers like India if the latter were to make efforts towards reducing supplies from Iran over a period of time.
RUPEE PAYMENT MECHANISM
Meanwhile, India is preparing a rupee payment mechanism for Iranian oil import. “We are coordinating with the central banks of India and Iran to put together this mechanism. More than one Indian banks are available for this,” an official said.
During the last sanctions, UCO Bank alone handled rupee payment for oil imports from Iran. Part of the rupee payment was used by Iran for purchasing food, drugs and chemicals from India but most of it was transferred to the Islamic Republic after the sanctions were lifted in 2016.
It wasn’t clear if India would persist with imports from Iran if the US waivers didn’t materialise. During the last Iran sanctions, US had allowed India to import certain quantity for which the payments were made in the rupee. Officials didn’t say if the companies will be able to, or want to, use the rupee payment mechanism without the waiver because that could mean antagonising the US.
Source: Eeconomic Times